Posted Date: August 20, 2015
Matt Sessa, Deputy Chief Operating Officer, Federal Student Aid
Subject: Federal Student Aid Posts Updated Reports to FSA Data Center
Today, Federal Student Aid posted a series of updates to its FSA Data Center, the centralized online source for Federal Student Aid data. Below is a summary of the updated quarterly reports available on the FSA Data Center. All reports reflect activity through or as of June 30, 2015.
The Federal Student Aid portfolio reports include outstanding balances and recipients by loan program, loan type, loan status, repayment plan, and delinquency status.
The Free Application for Federal Student Aid (FAFSA®) Reports include application submissions by the applicant’s legal state of residence and by the schools listed on the applicant’s form.
The loan volume reports include Direct Subsidized Loan, Direct Unsubsidized Loan, PLUS Loan (for parents), and PLUS Loan (for graduate and professional students) originations, disbursements, and recipients by school.
The grant volume reports include Federal Pell Grant, TEACH Grant, and Iraq and Afghanistan Service Grant disbursements and recipients by school.
In addition to the existing quarterly reports, we have added two new reports this quarter to the Title IV Program Volume Reports webpage which summarize award year activity. The Award Year Summary by School Type report sums up the loan and grant activity by school type. The Aid Recipients Summary report uses the methodology from the loan and grant reports to provide unique recipients by aid program.
Finally, we have enhanced our Direct Loan Portfolio by Repayment Plan report to include information about how many income-driven borrowers are making partial financial hardship (PFH) payments. The Income-Driven Repayment by PFH report is located on the second worksheet of the Direct Loan Portfolio by Repayment Plan report.
Key Findings in the Quarterly Reports
Federal Student Aid proactively posts these reports in support of open government initiatives to help ensure consistency, increase transparency, and establish self-service opportunities for customers. While not exhaustive, the information below provides a snapshot of key findings in our most recent reporting.
Shifts in the Outstanding Loan Portfolio
Since the implementation of the Health Care and Education Reconciliation Act of 2010, which eliminated new Federal Family Education Loan (FFEL) Program loans after June 30, 2010, the make-up of the outstanding loan portfolio has shifted. Today, the outstanding FFEL portfolio represents only 31.4 percent of the outstanding loan portfolio while the Direct Loan (DL) portfolio has grown to represent 67.9 percent of the outstanding loan portfolio. Perkins Loans make up the remaining 0.7 percent of the Federal Student Aid portfolio.
Increased Enrollment in Income-Driven Repayment Plans
Enrollment in income-driven repayment (IDR) options such as Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment continues to increase. As of June 30, 2015, nearly 3.9 million Direct Loan borrowers were enrolled in IDR plans, a 56 percent increase from June 2014.
For the first time, Federal Student Aid has provided information about borrowers enrolled in PAYE and IBR plans who make reduced payments based on a partial financial hardship. As of June 30, 2015, 81.7 percent of Direct Loan IBR and PAYE borrowers were making PFH payments. (Note: The ICR plan does not offer reduced payments to borrowers based on a partial financial hardship.)
Between June 30, 2014 and June 30, 2015, outstanding balances of DL recipients enrolled in IDR plans went from comprising 26 percent of DL balances in Repayment, Deferment, and Forbearance to nearly 34 percent.
Deferment and Forbearance Usage
Deferments now represent less than 12 percent of outstanding Direct Loan volume and less than eight percent of outstanding FFEL Program volume. Despite this decrease, the majority of deferments continue to be education-related deferments. Specifically, more than 84 percent of DL volume in deferment and 65 percent of FFEL volume in deferment are in education-related deferments.
The portion of Direct Loans in forbearance has also decreased, representing just 10.5 percent of DL volume. Almost 60 percent of Direct Loan dollars in forbearance are in discretionary forbearances related to temporary hardships, such as financial difficulties, change in employment, or medical circumstances, while another 22 percent are in administrative forbearance, a status that servicers often use while borrower actions are pending.
Delinquency in the DL Portfolio
Almost four out of five non-defaulted DL borrowers in active repayment are current (on time or less than 31 days delinquent) on their federal student loan payments. Thus, the active repayment 31+ delinquency rate for DL is 21.0 percent by recipient count and 15.9 percent by total dollar balance. When compared with the June 30, 2014 corresponding rates of 23.0 percent and 17.2 percent, this represents year-over-year decreases of 8.5 percent and 7.3 percent in the delinquency rates. In contrast, the ED-held FFEL portfolio (primarily loans purchased through the Ensuring Continued Access to Student Loans Act [ECASLA]) has a 31+ delinquency rate of 21.8 percent by recipient count and 23.0 percent by total dollar balance. When compared with the June 30, 2014 corresponding rates of 24.2 percent and 24.6 percent, this represents year-over-year decreases of 10.0 percent and 6.4 percent in the delinquency rates.
Please note that active repayment includes all current and delinquent borrowers whose accounts are currently serviced by federal servicers. Borrowers with loans in grace, in-school, in deferment, in forbearance, or in bankruptcy or disability status are not expected to make payments and are not included in this calculation. When calculating a delinquency rate that does include deferment and forbearance in addition to active repayment, the 31+ delinquency rate for DL decreases to 15.2 percent by recipient count and 10.9 percent by total dollar balance while the ED-held FFEL 31+ delinquency rate decreases to 15.4 percent by recipient count and 15.5 percent by total dollar balance.
Decreased Application Volume and Aid Disbursements
In the first two quarters of the 2015-2016 application cycle, approximately 13.7 million FAFSAs were submitted, a 3.8 percent decrease from the same time period last year. 2014-2015 FAFSA submissions were also down three percent from 2013-2014. The 2014-2015 grant and loan volume, as of June 30, 2015, suggests there will be similar declines in disbursements; however, at this time, the 2014-2015 volume is not mature enough to make those comparisons. In addition to typical year-end data adjustments, the 2014-2015 reports are likely to increase as a result of summer disbursements made for the 2014-2015 award year which occur after June 30.
Key Items to Note While Reviewing These Reports
To accurately interpret the data, please note the following items:
In the portfolio reports, recipient counts are based at the loan level. For that reason, recipients may be counted multiple times across varying loan statuses. For example, a recipient with one loan in deferment and one loan in forbearance would be counted once in each category. A recipient with two loans in the same status would only be counted once in that category.
In the portfolio reports by servicer, the not-for-profit servicers (NFPs) should not be directly compared to the Title IV Additional Servicers (TIVAS) due to differences in their portfolio composition. The NFP portfolio is overwhelmingly made up of accounts received from the Direct Loan Servicing Center in 2011-2012. These loans were already in repayment and current at the time they were transferred. As a result, the loans are more much stable and mature than the TIVAS portfolios. The TIVAS have high volumes of new borrowers who are much more likely to go in and out of delinquency. The TIVAS also service FFEL Program loans purchased through ECASLA and loans of all statuses received from the Direct Loan Servicing Center. Although the NFPs started getting new borrowers in January 2015, most of those loans are still in an in-school status.
The Direct Loan Portfolio by Delinquency Report should not be directly compared with the quarterly performance metrics for federal student loan servicers. The Direct Loan Portfolio by Delinquency Report is based on the Direct Loan portfolio only while the servicer metrics include all ED-held loans the servicer is responsible for, including ED-held FFEL Program loans. It should also be noted that the report on the FSA Data Center defines current repayment as less than 31 days delinquent while the most recent contracts with the servicers define current repayment as five days or less delinquent.
In the loan and grant reports, the first tab of the spreadsheet shows the number of recipients and disbursements for the specified quarter while the second tab shows the cumulative, award year-to-date activity. The second tab of an award year’s fourth quarter report will show data for the full award year. Since the information is reported by specific loan type or grant program, a total unique grant or loan recipient count is not available by school.
Please note that since loan and grant reports are run a few days after the quarter’s end, initial runs often underreport activity as a result of reporting delays and activity that occurs for the award year after the date (for example, summer disbursements).
The FSA Data Center was launched in 2009 in an effort to increase government transparency by proactively posting information useful to businesses, institutions, the media, and individuals. In addition to the reports listed above, Federal Student Aid regularly posts strategic plans, copies of executed contracts, and school compliance reports, such as Clery Act reports and financial composite scores, on the FSA Data Center. Federal Student Aid is committed to continuing to expand the data sets available on the FSA Data Center in alignment with customer needs.